Term life insurance
Which of the following best describes with the annuity period Is
The period of time during which accumulated money is converted into income payments
Which of the following settlement options in life insurance is known as straight life?
Life income the life income option also known as street life provides the recipient with an income that he or she cannot outlive it pays the benefit while the beneficiary is a live however the payment stop at the beneficiaries death.
Which of the following settlement options in life insurance is known as street life
Life income the life income option also known as street life provides the recipient with an income that he or she cannot outlive it pays the benefit while the beneficiary is alive however the payment stop at the beneficiaries death
All of the following are true regarding a decreasing term policy EXCEPT
The payable premium amount steadily declined throughout the duration of the contract. Premiums remain level with a decreasing term policy; only the face amount decreases.
If an insurer issued a policy based on the application that had unanswered questions which of the following will be true
The policy will be interpreted as if the insurer waived it's right to have an answer on the application
The termination of marital property rights may be reversed for all of the following reasons EXCEPT?
The spouse named as beneficiary has obtained or consented to a final decree of judgment of an annulment, divorce or separation
How are contributions to a tax sheltered annuity treated with regards to taxation
They are not included as income for the employee but are taxable upon distribution.
How are contributions to a tech sheltered annuity treat it with regards to taxation?
They are not included as income for the employee but or a taxable upon distribution.
Any life insurance whose activities affect interstate commerce makes false statement about the business of insurance may go to jail for
10 years or fined maybe both up to 15 yrs.
Rebating is an unfair trade practices and is regulated by law. All of the following would be considered to be rebating except ?
An agent misrepresents policy benefits to convince a policy owner to replace policies
Which of the following includes information regarding a persons credit, character, reputation, and habits?
Consumer report
Which of the following is true regarding taxation of dividends in participating policies
Dividends are not taxable.
During partial withdrawal from a universal life policy which portion will be taxed
Interest during the withdrawal, the interest earned on the withdrawn cash value may be subject to taxation.
What describes the specific information about a policy?
Policy summary
And insurance company forwards fixed annuity premiums to the general account where the money is invested the guaranteed minimum interest is set at 2.5% during an economic downswing the investments only drew 2% what interest rate will the insurer pay to its policy holders?
2.5% insurance companies promise guaranteed minimums on the fixed annuities this means that if the investments draw less than that the company will have to pay 2.5% anyway if the investment earned over 2.5% the company will pay the excess
Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained?
3 days
Within how many days must a producer respond to an inquiry from the commissioner
30 days licensees are required to provide a written response to a department's inquiry within 30 days
In order to qualify for conversion from a group life policy that has been terminated to an individual policy of the same coverage a person must have been insured under the group plan for how many years
5 years if the master contract is terminated every individual who has been on the plant for at least five years will be allowed to convert to individual insurance of the same coverage.
Which of the following best describes fixed. Settlement option
Both the principal and interest will be liquidated over a selected period of time.
If a licensed person is moving to Pennsylvania he or she may become licensed as a resident if they submit a completed application within how many days of establishing residence in Pennsylvania with proof of licensing from their prior home state?
90 days
All of the following could own group life insurance a Except?
A group needing low-cost life insurance groups purchasing group life insurance must be formed for a reason other than purchasing insurance
A straight life policy has what type of premium?
A level annual premium for the life of the insured straight life policies charge a level annual premium for the lifetime of the ensure it and provide a level guaranteed death benefit.
A Straight Life policy has what type of premium
A level annual premium for the life of the insured.
Which of the following statements is Incorrect?
A licensee is barred from charging a fee in addition to a commission to a person for the sale, solicitation or negotiation of a contract of insurance for commercial business.
If an insurance company makes a statement that it's policies are guaranteed by the existence of the insurance guaranty Association that would be considered
And unfair trade practice it is an unfair trade practice to make any statement that an insurance policy are guaranteed by the existence of the insurance guaranty Association though it is illegal to advertise the statement is still true and would not be considered a misrepresentation
Because an agent is using stationary with the logo of an insurance company, applicants for insurance assume that the agent is authorized to transact on behalf of that insurer. What type of agency authority does this describe?
Apparent authority or perceived authority. Assumption of authority based on the actions, words or deeds of the principal.
Which of the following is a feature of variable annuity
Benefit payment amounts are not guaranteed Under a variable annuity, the issuing insurance company does not guarantee a minimum interest rate or the benefit payment amount. The annuitants payment into the annuity are invested in the insurer's separate account. Agents selling variable annuities are required to have a securities license in addition to their life agents license
Which is the clause that describes the method of paying the death benefit in the event that the insured and beneficiary or both killed in the same accident
Common disaster clause it's the provision that states when an insured and beneficiary die in a common accident and the beneficiary dies before or within a specific period of time if that insured the insurer will proceed as if the insured outlive the beneficiary.
Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policyowner?
Cash surrender (once cash surrender value is paid contract is over)
Which component increases in the increasing term insurance?
Death benefit
Which component increases in the increasing term insurance
Death benefit increasing term features level annual premiums and a death benefit that increases each year over the duration of the policy term.
Which of the following is not typically excluded from life policies
Death due to plane crash for a fair paying passenger generally policies do not exclude conditions in which an insured is a fair paying passenger on a commercial airline
An individual has just borrowed $10,000 from his bank on a five-year installment loan requiring monthly payments what type of life insurance policy would be best suited to the situation?
Decreasing term a decreasing term policy face amount decreases as the amount of debt is reduced
If an insurer appoints a producer which authority must be notified
Department of insurance
Which of the following authorities monitors the financial strength of insurers
Department of insurance the commissioner and the department of insurance are charged with monitoring the financial strength and integrity of insurance authorized to conduct business in Pennsylvania in order to determine whether the continued operation of any insurer might be financially hazardous to policyholders creditors or to the public in general
Which of the following best describes an insurance company that has been formed under the laws of this state?
Domestic
All of the following statements are true regarding tax qualified annuities EXCEPT
Employer contributions are not tax-deductible Tax qualified annuities must be approved by the IRS and allow for tax deductible employer contributions. All withdrawals are taxed and earnings grow tax deferred.
When the insurance selects the extended term nonforfeiture option the cash value will be used to purchase term insurance with what face amount?
Equal to the original policy for as long as the cash values will purchase
And insurance company has published a brochure that in accurately portrays the advantages of a particular insurance policy what is this an example of?
False advertisement It is the illegal practice of advertising or circulating materials that are untrue deceptive or misleading.
Circulating deceptive sales material to the public is what type of unfair trade practice
False advertising this is considered to be false, deceptive or misleading advertising
If an insurer changes a form that it uses to transact insurance it must do which of the following
File the form with the commissioner for approval all forms including changes to previously approved forms must be filed with the commissioner the commissioner will approve or disapprove the form if 30 days after the form is filed no action is reported the insurer can assume that the form is approved.
An applicant wants to buy a life insurance policy in which he can count on receiving the same benefits as stated in the contract which type should he buy?
Fixed Fixed life insurance policies offer minimum guaranteed or fixed benefits stated in the contract. Variable life insurance or annuity's are contracts in which the cash values accumulate based upon a specific portfolio of stocks without guarantees of performance.
Under which is dormant option does the annuitant select the amount of each payment and the insurer determines how long they will pay benefits
Fixed amount
If a beneficiary wants a guarantee that benefits pay from principal and interest would be paid for. Of 10 years before being exhausted what settlement option should the beneficiary select
Fixed.
Under a 20 pay whole life policy in order for the policy to pay the death benefit to a beneficiary the premiums must be paid
For 20 years or until death whichever occurs first
A Universal Life Insurance policy has two types of interest rates that are called?
Guaranteed and current
A universal life insurance policy has two types of interest rates that are called?
Guaranteed and current the insurer credits the cash value in the policy with a current (non-guaranteed) interest rate and backs the cash value with a contract (low guaranteed) rate of interest.
At the time the insured purchased her life insurance policy, she added a rider that will allow her to purchase additional insurance in the future without having to prove insurability this writer is called
Guaranteed insurability
If a policy allows the policy owner to make periodic additions to the face amount it's standard rates without proving insurability the policy includes a
Guaranteed insurability rider the guaranteed insurability rider allows the policy owner to purchase specific amounts of additional insurance as specific dates or events without proving continued insurability rates for the additions are based upon the attained age
Events or conditions that increase the chances of an insured and loss occurring are referred to as?
Hazards
An insurer devises an intimidation strategy in order to corner a large portion of the insurance market which of the following best describes this practice
Illegal it is illegal to participate in any boycott , coercion or intimidation that is intended to restrict fair trade or create a monopoly
An insurer publishes intimidating brochures that portray the insurers competition as financially and professionally unstable which of the following best describes this act?
Illegal under any circumstances, when a company criticizes the financial situation of another company with the intention of injuring that company it has committed in illegal tree practice called defamation.
What type of insurance would be used for a return of premium rider
Increasing Term The Return of Premium Rider is achieved by using increasing term insurance. When added to a whole life policy it provides that at death prior to a given age, not only is the original face amount payable, but also all premiums previously paid are payable to the beneficiary.
And insurer receives a report regarding a potential ensure it that includes the insurance financial status hobbies and habits what type of report is that?
Inspection report inspection reports cover moral and financial information regarding a potential insurance usually supplied by private investigators and credit agencies.
Which statement regarding insurable risk is not correct
Insurance cannot be randomly selected. Granting insurance must not be mandatory, selecting insurance randomly will help the insurer to have a fair proportion of good risks to poor risks.
Who makes up the MIB?
Insurers
Who makes up the medical information bureau
Insurers
The policy owner wants to make sure that upon his death the life policy will pay a portion of the proceeds annually to his spouse but that the principal will be paid to their children when they reach a certain age which settlement option should the policy owner choose?
Interest only option With the interest only option then insurance company retains the policy proceeds and pays interest on the proceeds to the recipient beneficiary at regular intervals
The mode of premium payment
Is defined as the frequency and the amount of the premium payment.
Which of the following does a producer not have the authority to do?
Issue policies An insurance producer sells solicits or negotiate contracts of insurance.
What is the main purpose of the 7 pay test?
It determines if the insurance policy is a MEC. The 7P test determines whether an insurance policy is over funded or if it's a modified endowment contract.
All of the following statements are true regarding installments for fixed period Annuity settlement option except
It is a life contingency option under the installments for a fixed period annuity settlement option, the annuitant selects the time period for the benefits the insurer determines how much each payment will be. This option pays for a specific amount of time only and there are no life contingencies
Which of the following is TRUE regarding the accumulation period of an annuity
It is a period during which the payments into the annuity grow tax deferred. The accumulation period is the period of time over which the annuitant makes payments (premiums) into an annuity.
When a reduced paid up nonforfeiture option is chosen what happens to the face amount of the policy
It is reduced to the amount of what the cash value would buy as a single premium.
Which of the following is true of a children's rider added to an insurer is permanent life insurance policy?
It is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age.
Which of the following statements is TRUE concerning the accidental death rider?
It will pay double or triple the face amount in result of an accident as defined in the policy and occurs in 90 days.
Which of the following is not true regarding the accumulation period of an annuity?
It would not occur in a deferred annuity.
A couple receives a set amount of income from their annuity when the wife dies the husband no longer receives annuity payments what type of annuity did the couple buy?
Joint life joint life annuity settlement option pays benefits to two or more annuitants but stops upon the death of the first
The reduction decrease or disappearance of value of the person or property insured in a policy by a pearl insured against is known as?
Loss is the reduction, decrease, or disappearance of value of the person or property insured in a policy by a peril insured against.
Using a class designation for the beneficiaries means
Not naming beneficiaries as a group class designations are used when an insured chooses to distribute benefits among the living beneficiaries and or their heirs without naming each individual person such as "all my children."
Which of the following is not correct regarding false statements by a person engaged in the business of insurance?
Only written statements can be considered fraud.
A rider attached to a life insurance policy that provides coverage on the insurance family member is called the
Other insurance rider the other insurance rider is useful in providing insurance for more than one family member the type of insurance offered by this writer is usually Term insurance with the right to convert to permanent insurance.
A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will
Pay the policy proceeds only if it had issued the policy.
If a court order payment for a loss that was not covered in the policy even if it was clearly worded, it would be an example of which legal concept?
Reasonable expectations
Which nonforfeiture option provide coverage for the longest period of time?
Reduced paid up the reduced paid up nonforfeiture option would provide protection until the insurance reaches 100 but the face amount is reduced to what the cash would buy
Installing deadbolts locks on the doors of a home is an example of which method of handling risk?
Reduction steps taken to (prevent losses from occurring)
The federal fair credit reporting act
Regulates consumer reports
Insurance producers that do not have company appointments are considered a/an
Representative of the consumer.
A man decided to purchase a $100,000 annually renewable term life policy to provide additional protection until his children finished college. He discovered that his policy
Required a premium increase each renewal
A policy owner who is also the insured and wants to name her husband as the beneficiary of her life policy she also wishes to retain all of the rights of ownership the policy owner should have her husband named as the
Revocable beneficiary the policy owner may change your revocable designation at any time and without the consent of the beneficiary era vocable beneficiaries on the other hand have a vested interest in the policies of the policy owner may not be able to exercise certain rights without their consent.
If an immediate annuity is purchased with the face amount at death or with the cash value at surrender this would be considered a?
Settlement option a settlement option is exercise win an immediate annuity is purchased with the face amount at death or with the cash value at surrender
Which two terms are associated directly with the way an annuity is funded?
Single payments or periodic payments. Annuities are set by how they can be paid for either single or lump sum or periodic payments in which premiums are paid in installments over a period of time frequently of installments varies
Which type of life insurance policy generates immediate cash value?
Single premium like other types of whole life policies single premium whole life endows for the face amount of the policy if the insured insured lives until the age of 100. The distinguishing feature of single premium whole life is the fact that it generates immediate cash value due to the lump sum payment made to the insurer.
A policy that only requires a payment of premium at its inception provides insurance for life and matures at 100 is called
Single premium whole life it requires the entire premium to be paid in one lump sum at the policies inception
Which of the following determines the length of time that benefits will be received under the fixed amount settlement option?
Size of each installment
Which of the following determines the length of time that benefits will be received and did a fixed amount settlement option
Size of each installment the size of each installment determines the length of time that benefits are received under the fix amount settlement option it logically follows that larger installments translate into shorter benefit periods
Events in which a person has both the chance of winning or losing are classified as?
Speculative risk
All of the following are unfair claims settlement practices except
Suggesting negotiations in settling the claim.
Which of the following is an example of a producer being involved in an unfair trade practices of rebating?
Telling a client that his first premium will be waived if he purchased the insurance policy today
Which of the following is not true regarding the annuitant?
The annuitant cannot be the same person as the annuity owner.
All of the following statements about equity index annuities are correct EXCEPT
The annuitant receives a fixed amount of return
Which of the following is not the consideration in a policy
The application given to a prospective insured consideration is something of value that is transferred between the two parties to form a legal contract
The annuity owner dies while the annuity is still in the accumulation stage. Which of the following is TRUE?
The beneficiary will receive the greater of the money paid into the annuity or the cash value.
A corporation is the owner and beneficiary of the key person life policy if the corporation collects the policy benefit then
The benefit is received tax free should I keep person die the benefit is treated as a reimbursement to the business for loss of services from that key person.
Which of the following entities must approve all continuing education courses in this state
The commissioner all continue in education programs and courses must be approved by the commissioner
With regard to premium rates which of the following statements is not true?
The commissioner sets all insurance premium rates used in Pennsylvania or premium rates must be filed with the commissioner the insurer must wait 30 days before using the filed rate or until the approval is received if after 30 days the filing has not been disapproved the insurer must use the filed rate
In comparison to consumer reports which of the following describes a unique characteristic of investigative consumer reports
The consumers associates friends and neighbors provide the report's data. both consumer reports and investigative consumer reports provide additional information from an outside source about a customers character and reputation and both types of reports are used under the fair credit reporting act
If an insured withdraws a portion of the face amount in the form of accelerated benefits because of a terminal illness, how will that affect the payable death benefit from the policy
The death benefit will be smaller. If an insured withdrws a portion of the death benefit by the use of this rider the benefit payable at death will be reduced by the amount plus the amount of earnings lost by the insurance company in interest income
Which of the following protects consumers against the circulation of in accurate or obsolete personal or financial information?
The fair credit reporting act
And employee quits his job on May 15 and doesn't convert his group life policy to an individual policy for two weeks he dies in a freak accident on June 1 which of the following statements best describes what will happen
The insurer will pay the full death benefit from the group policy to the beneficiary the employee usually has a period of 31 days after terminating from the group in order to exercise conversion option during this time the employee is still covered under the original group policy
Not all losses are insurable and there are certain requirements that must be met before a risk is a proper subject for insurance these requirements include all of the following Except
The laws may be intentional to ensure intentional losses would be against public policy
All of the following are true regarding the guaranteed insurability rider EXCEPT
This rider is available to all insureds with no additional premium.
All of the following are true regarding the guaranteed insurability rider Except
This rider is available to all insureds with no additional premium.
Which of the following is not a goal of risk retention
To minimize the insurance level of liability in the event of loss retention usually results from three basic desires of the insurance to reduce expenses and improve cash flow to increase control of claim reserving and claims settlements into fun losses that cannot be insured
The paid up additions option uses the dividends
To purchase a smaller amount of the same type of insurance as the original policy.
24 hours current and 24 hours immediately, the excess of 4 hours may not be carried over
To successfully complete 52 hours of CE
Which type of life insurance policy allows the policy owner to pay more or less than the plant premium
Universal life the policy owner has the flexibility to increase the amount of premium going into the policy and to later decrease it again in fact the policy owner may even skip paying a premium in the policy will not lapse as long as there is sufficient cash value at the time to compensate for the nonpayment of premium.
All of the following are true regarding the convertibility option under a term life insurance policy EXCEPT
Upon conversion, the death benefit of the permanent policy will be reduced by 50%
The insurer must be able to rely on the statements in the application and the insured head must be able to rely on the insurer to pay valley claims in the forming of an insurance contract this is referred to as?
Utmost good faith
Which of the following is not true regarding the regulation of variable annuities
Variable annuities are regulated solely by the state department of insurance
An agent in an applicant for life insurance policy fill out and sign the application however the applicant does not wish to give the agent the initial premium and no conditional receipt is issued when will coverage begin
When the agent delivers the policy, collects the initial premium and the applicant completes an acceptable statement of good health. If the initial premium is not paid with the application the agent will be required to collect the premium at the time of policy delivery in this case the app I can't will most likely need to fill out a statement of good health
Which of the following statements regarding the taxation of modified endowment contract or false?
Withdrawals are not taxable. Any distributions from mix or taxable including with drawls and policy loans. True; •distributions before age 59 1/2 incur a 10% penalty on policy gains •policy loans are taxable distributions •accumulations our tax deferred
Bail-Out Provision
allows the annuity owner to surrender the annuity without surrender charges if interest rates drop a specific amount within a specific time period
What is the tax consequence of amounts received from a traditional IRA after the money was left in the tax deferred account by the beneficiary?
income tax on distributions and no penalty.
The type of term insurance that provides increasing death benefits as the insured ages is called?
increasing term
All of the following are beneficiary designations Except
specified
